WASHINGTON (BestWire) - Investigations led by New York state Attorney General Eliot Spitzer of fraudulent and anti-competitive
behavior in the insurance industry have yielded more than $3 billion in restitution and penalties, according to Spitzer's
office. But the chairman of a key U.S. Senate panel wants to know why more of the perpetrators haven't been sent to jail.

Sen. Arlen Specter, R-Pa., grilled several witnesses on the matter during hearings of the Senate Judiciary Committee called
to examine whether the industry's limited exemption from federal antitrust law ought to be repealed. The exemption is granted
under the 62-year-old McCarran-Ferguson Act, which established that federal antitrust laws apply to the "business of insurance"
only to the extent such business isn't regulated by state law.

Illinois Director of Insurance Michael McRaith defended the established state-based system as the best available model. He
pointed to the bid-rigging investigation launched by Spitzer -- and joined by insurance commissioners and prosecutors in multiple
states -- as an example of the system functioning to address problems that crossed jurisdictions. McRaith also noted that
the National Association of Insurance Commissioners moved to create a 15-state task force to coordinate its review of broker
activities.

"As the insurance regulator in Illinois, we had two priorities," McRaith said. "First, let's make sure that the consumers
that are harmed by this conduct receive the restitution that they're entitled to. And secondly, let's take any action that
we need to take to ensure that this conduct does not occur again."

But Specter questioned why criminal charges were never filed in Illinois against firms targeted by the investigation, noting
that New York's investigation had elicited guilty pleas to criminal charges from 20 executives and officers in connection
with bid-rigging and customer allocation schemes. If customers in the state had been harmed by the activities of insurers
and brokers accused of rigging bids for commercial excess insurance, then the "teeth in governmental action comes with criminal
prosecution and jail sentences," Specter said.

"You're taking a public policy position here before this committee that you don't think there should be federal antitrust
jurisdiction," Specter told McRaith. "In the context of criminal conduct which is not being prosecuted in Illinois, the question
arises in my mind as to why you would want to keep the feds out of it. The feds have a pretty good record in Illinois. Wasn't
there a guy named Capone from that state?"

Specter also questioned Elinor R. Hoffmann, an assistant attorney general with New York state's antitrust bureau, as to why
Spitzer had pursued primarily civil suits against the firms implicated in its investigation, which most recently expanded
to include a May 2006 complaint alleging violations of the state's Donnelly Act by Liberty Mutual. Spitzer previously had
reached settlements with brokers Marsh & McLennan Cos., Aon Corp., and Willis North America, and insurers Zurich Financial
Services, Ace Ltd., and American International Group.

Hoffmann said the state generally would consider the cooperation shown by a company and its willingness to correct its conduct
in determining whether to pursue criminal prosecution.

"There is also the recognition that criminally prosecuting a company can sometimes cause far more farm to innocent individuals
-- customers, employees, and others the industry -- than would be warranted," Hoffmann said.

The hearings marked the first time since 1989 that the Senate Judiciary Committee revisited the issue of McCarran-Ferguson,
passed in the wake of 1944's landmark U.S. vs. South-Eastern Underwriters Association decision, in which the Supreme Court
overturned existing precedent to declare that insurance business constituted "interstate commerce." They were called by Specter
and Ranking Member Patrick Leahy, D-Vt. -- who also were the only senators to attend the session -- in light of several recent
bills that call for exemptions to or repeal of portions of McCarran-Ferguson.

Those measures include Leahy's own Medical Malpractice Insurance Antitrust Act. The bill, S. 1525, calls for specific exceptions
to McCarran-Ferguson for medical malpractice insurers to allow federal prosecution of price fixing, bid rigging, or market
allocations to the detriment of competition and consumers.

"If insurers around the country are operating in an honest and appropriate way, they should not object to being answerable
under the same federal antitrust laws as virtually all other businesses," Leahy said. "American consumers, from sophisticated
multinational businesses to individuals shopping for personal insurance, have the right to be confident that the cost of their
insurance reflects competitive market conditions, not collusive behavior."